US Economy: Palin’s Alaska Drilling at the Cost of the Environment

Anchorage, 11 Sep. When John McCain announced his vice-presidential running-mate, Alaskan Governor Sara Palin, not many Americans had heard of her. But now she is a household name, with controversy surrounding her family life, religious views, and oil-drilling agenda.

Alaska is a state of great wealth, and always has been. When the US bought it from the Russians in 1867 they knew they were getting a good deal, at 2 cents per acre. It’s all trees and tundra anyway so what good was it to the Russians – they have enough of that in Siberia.

The Americans wanted Alaska for its gold and furs, and times of boom and bust punctuated the territory’s economic development before it became a state. Prospectors and trappers would strike it rich and then go broke. So after oil was discovered and the state had a significant population to look after, the Permanent Fund was created.

Starting with $734,000 in 1976, the Permanent Fund has grown to a massive $38 billion today. The fund is designed to manage the state’s surplus oil revenue and create financial stability, unlike in the boom and bust times of the 1800s. Each Alaskan resident gets paid a portion of this fund per year, $1,654 per eligible resident, in 2007. Some, in fact, live off the land and this fund – with no official job.

The vast natural reserves of Alaska (not only oil but gold, zinc, natural gas, and you can’t forget crab and salmon) have been good to the Alaskan economy, raking it fifth in the US in per-capita income. And Sara Palin’s plans to further tap these reserves have been about as questionable as her daughter’s boyfriend.

Palin backs more oil and gas drilling in environmentally-sensitive area, endorses aerial culling of bears and wolves, and is against a national drive to list the polar bear as an endangered species, on the brink of extinction. If polar bears are listed as an endangered species, they will interfere with oil and gas exploration and drilling.

The LA Times says she is “putting drilling above environment”. The Natural Resources Defense Council claims that her drilling plans would create a sprawl far greater than she forecasts. Palin says her drilling plans would only cover 2,000 acres in Alaska’s Arctic National Wildlife Refuge (ANWR).

A three-year U.S. Geological Survey study found that the ANWR oil reserves were not contiguous, meaning that the 2,000 limit was unrealistic to reach these fragmented deposits. Politifact.com, a website that rates political statements as being true or false, assesses Palin’s statement that the drilling would only cover 2,000 acres as only part-true, due to the extensive road and pipeline network that would branch out around and within the wildlife refuge.

But Palin’s argument comes at the right time for Americans who have never seen such high petrol prices. The 5.7 billion to 16 billion barrels of oil in ANWR would help to reduce the nation’s pump prices. This will take years, others argue, when the country should be changing its habits and exploring other, greener alternatives.

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Nouriel Roubini, a.k.a. “Doctor Doom”, is chairman of Roubini Global Economics and professor of economics at New York University’s Stern School of Business. Roubini has been consistently cited as one of the world’s top global thinkers. This year, he was voted as the most influential economist in the world by Forbes magazine.

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